Make Child Support Tax Deductible Again
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Summary: This is a petition to the Federal Government to make child support tax deductible for the payer, the way it was prior to 1997.
Details and History:
In their New Child Support Package, March 6 1996, the Liberal government declared that child support paid under orders or agreements made on or after May 1, 1997 will no longer be taxed as income to the recipient, or be tax deductible for the payer. The total savings for federal and provincial governments was estimated at about $410 million for the 1996-97 fiscal year. The government committee, led by Kim Campbell, suggested that no supporting parent should gain a tax benefit from having to support children that they otherwise would have been supporting had they stayed married.
In a new report, An assessment of Federal Child Support Guidelines, (https://www.fraserinstitute.org/sites/default/files/an-assessment-of-the-federal-child-support-guidelines.pdf) authored for the Fraser Institute by Nippissing University professor of economics, Chris Sarlo, it is noted that the 1997 Guidelines ignore government benefits to low and middle class families, as well as the costs to the non-custodial parent of adequately housing and hosting children during “access” times. Sarlo argues that non-custodial parents in Canada often overpay by many thousands of dollars — money for which no mechanism exists to ensure it is spent on the children — and so the custodial parent can reap a net profit. Sarlo identifies many issues that advise political leaders and policymakers to overhaul Child Support policy.
While the government in 1997 suggested that no parent should benefit from supporting their children financially, they went on to create further tax credits for custodial parents, and the current system unfairly benefits the custodial parent.
Child support amounts set out by the guidelines do not include additional section 7 expenses. Many section 7 expenses such as child care and medical expenses are tax deductible or offered as tax credits to the custodial parent, but these are paid for by the non-custodial parent over and above the tabled child support amounts. It is unfair that the custodial parent get to claim these amounts.
The new Canada Child Tax Benefit (CCTB) has rewards adjudicated based on recipient income. The custodial parent currently does not have to claim child support as income. Thus, a parent with two children under 6 is still entitled to receive $1,100/month even if they are already receiving $10,000/month in child support from a previously well off relationship. This is unfair to taxpayers. By making child support recipients claim their support as income the government would have a better representation of what financial support single parent families actually require.
Since the government’s decision in1997 the Family Responsibility Office has seen arrears amounts balloon to over $3.7 Billion. Nearly two-thirds of all support orders are in arrears, and in Ontario that number is nearly eighty percent. Maintenance enforcement programs take away the drivers licences of child support payers, and throw them in jail. The Ombudsmen’s office is flooded with complaints. The Family Responsibility Office and the Office of the Ombudsmen are not funded to appropriately staff the current and unnecessary burden child support places on payers and the families of payers.
While it should be argued that Child Support reform is well overdue, this petition simply asks for some assistance until then.
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